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Are Hospital Pay-For-Performance Programs Really Paying Off?

Are Hospital Pay-For-Performance Programs Really Paying Off?Tufts expert Peter Lindenauer says that more research is needed into hospital pay-for-performance programs, which have led to only small improvements in quality of care, according to a recent study published in the New England Journal of Medicine.

Boston [02.28.07] Offering hospitals financial incentives to boost their performance may result in only modest gains in quality of care, according to a recent study published in the New England Journal of Medicine. Over a two-year period, the study found that the quality of care at hospitals receiving performance-based bonuses was only slightly better than the quality of care at hospitals that were not eligible for financial compensation. More research is needed into these programs, said the study’s lead author, Peter Lindenauer, MD, MSc, FACP, Medical Director of Clinical and Quality Informatics at Baystate Medical Center and an assistant professor at Tufts University School of Medicine.

“The pay-for-performance hospitals performed better on all the quality measures but the differences were small after adjusting for certain variables, such as baseline performance, hospital size and patient volume,” the Wall Street Journal reported.

According to the HealthDay News, the study included 613 hospitals, all of which participated in a national quality of care public reporting initiative. Of those facilities, 207 participated in the pay-for-performance program, which is a demonstration project of the federal Centers for Medicare and Medicaid Services (CMS).

The Wall Street Journal reported that the study focused on how often hospitals administered certain treatments to patients, including providing aspirin to heart-attack victims immediately upon their arrival at the hospital and giving antibiotics to pneumonia patients within four hours. While the pay-for-performance hospitals did show small improvements in quality of care, the impact of the bonuses was “very modest,” Lindenauer told the newspaper.

Before the CMS commits to adopting this type of system, the agency should conduct more research, according to Lindenauer, a member of the Center for Quality and Safety Research at, Mass.-based Baystate Medical Center, which is a Tufts University School of Medicine academic affiliate.

"Financial incentives can be successful in changing hospital and physician behavior to accelerate the rate of quality improvement," Lindenauer told HealthDay. "But we shouldn't have too high expectations for it until we've evaluated alternative approaches to structuring the programs, have tinkered with the size of the incentive program, and tested a different set of measures and evaluated some of the potential unintended consequences.”

Lindenauer added that because the pay-for-performance system is more expensive to administer, the CMS needs to determine whether or not the cost outweighs the benefit. He also pointed to another potential flaw in the system: the hospitals participating in the pay-for-performance system were evaluated in comparison to other institutions.

“This meant that most of the payments went to hospitals that showed the least improvement, but had already begun the program with higher quality scores,” HealthDay reported. According to the researchers, some hospitals that greatly improved their quality of care did not receive a bonus, the newspaper noted.

"There is only so far you can improve if you're starting at 90 percent," Lindenauer told HealthDay. "So, part of the reason for the modest gains was partly an artifact that these are conditions for which Medicare and other organizations have been focusing improvement efforts on."

The amount of the financial incentive is another factor to consider, according to Lindenauer. "In addition to the structure of the program, whether the size of the bonuses should be greater is a question that ought to be studied," told HealthDay.

He also told HealthDay that the CMS needs to determine whether or not hospitals that are performing well in the categories being evaluated as part of the pay-for-performance program are falling behind in other areas.

"We don't know whether care for other conditions could have suffered as a result of hospitals paying less attention to those conditions, to excel in the areas under study," he said.

Lindenauer also described a need to evaluate the program’s long term effects.

"We don't know if the gains are sustainable if the financial incentives were to disappear,” he told HealthDay.


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